Baroda BNP Paribas MF optimistic on financial inclusion, manufacturing, retail

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The CIO of Baroda BNP Paribas mutual fund is bullish on the themes of financialization and industrialization, adding that India's energy focus and retail growth story will together be a big driver going forward.

Sanjay Chawla, Baroda BNP’s CIO said India will capitalize on financial inclusion through innovations such as UPI, lending by fintech and growing use of AI by banks for customer acquisition. He was speaking on the sidelines of an event marking the mutual fund doubling its Assets Under Management (AUM) from over Rs 21,000 crore to over Rs 49,000 crore in just three years.

"The insurance sector, still underpenetrated, and asset management in wealth management are also areas of opportunity," he said.

Chawla said the changing consumer behaviour, particularly in younger generations (Millennials and Gen Z) presents challenges as well as opportunities. Companies that can adapt to the demand for affordable luxuries and customization are well-positioned to benefit from this theme, he added.

Baroda BNP’s CIO said solar energy presents a good opportunity for investment.

"We are going through the fifth wave of industrialization, from steam engines to the internet of things, and soon to AI. India has an important role to play in this area, and it can lead to interesting investment opportunities," Chawla said.

Earnings Upside

Chawla said a delayed capex by government impacted earnings growth, which weighed on equity markets as well. "…earnings growth has been modest, around 4-6%, with Q1 and Q2 performing slower than expected. At the beginning of the year, there were potential slowdowns, especially due to elections and slower capex. As a result, earnings came in lower than anticipated, and the delay in government capex spending also impacted growth," said the CIO.

Sanjay Chawla said Q3FY25 numbers reveal a different picture, and by excluding sectors such as BFSI, external-facing commodities, and others, the earnings growth appears robust. The domestic demand remains strong, said Chawla, which gives the hope that Q4FY25 will be promising and exciting.